Real estate brokerage Marcus & Millichap has arranged the sale of two apartment buildings in Chelsea for a combined $7.2 million, with both properties going to 1031 exchange buyers, The Commercial Observer has learned.
The buildings, at 368 8th Avenue and 311 West 29th Street, bring the private investors who purchased them an opportunity to realize significant upside through upgrades and renovations, brokers at Marcus & Millichap said.
The 7,225-square-foot property at 368 8th Avenue, between West 28th and West 29th Streets, sold for just under $3 million and consists of 22 SRO apartments, most of which are vacant. Also, the 2,400-square-foot, ground floor retail space is occupied by 7-Eleven.
“This gives the new owner a credit tenant and a big corporate brand with a long lease, starting them off with a very stable, strong income stream and a foundation they can build upon,” said Marcus & Millichap’s Peter Von Der Ahe, who handled the transactions exclusively with Joseph Koicim and David Lloyd.
The property at 311 West 29th Street, between 8th and 9th Avenues, is a five-story, 6,555-square-foot walkup, with 19 occupied and operating studio apartments. It was sold to a separate private investor for $4.2 million, closing in just under two weeks, brokers said.
“Within 10 days of hitting the market, we generated seven written offers and had the buyer sign a contract above our asking price,” Mr. Koicim said. “We recently sold a building for this buyer in the East Village and, due to our team’s diligence, assisted him in the identifying and closing of this well located Chelsea asset.”
If exchange buyers close within 6 months, they are allowed to defer capital gains taxes from the sale of a previous investment. Almost half of Marcus & Millichap’s transactions are being sold to 1031 buyers, Mr. Von Der Ahe said.
“With our network and our local focus we have the largest access to these types of 1031 buyers,” he said. “They don’t have time to play games, often resulting in higher selling prices.”
Chelsea has seen significant rent growth, particularly over the past five years, as the neighborhood rapidly gentrified and the popular, elevated Highline park came to fruition. The sports and entertainment complex at Chelsea Piers and Chelsea Market – host to numerous city retailers and restaurants – are also main neighborhood draws.
Mr. Von Der Ahe, Mr. Koicim and Sean Lefkovits recently arranged the sale of a five-story, 4,788-square-foot townhouse at 402 West 22nd Street, also in Chelsea, for $3.5 million; that team is currently marketing nearby properties at 410 West 22nd Street and 412 West 22nd Street, which house a combined 18 units.